RITES Ltd, a Navratna PSU under the Ministry of Railways, has reworked its business strategy as it looks to focus on competitive bidding for rolling stock export orders across markets in South East Asia, Latin America and Africa.

The company has received two major export orders amounting to over ₹1,200 crore in the last few months which include ₹915 crore order from Bangladesh and another ₹300 crore project from Mozambique.

While the Mozambique order came last fiscal, the State-owned company signed a contract with Bangladesh Railways, earlier this fiscal, to supply 200 broad-gauge passenger carriages with the contract being valued at $ 111.26 million.

According, to Rahul Mithal, Chairman and Managing Director, RITES Ltd will look to “aggressively bid” in international markets, specially through competitive bidding.

Previously it would focus on LOC (line of credit) contracts. But there was a conscious change in strategy as RITES looked to up its export order book.

Quality assurance

“We have been aggressive in the international market for rolling stock orders and some of them could materialise later this fiscal. This apart, we have been bidding for quality assurance and consultancy projects in addition to theRailways,” he told businessline.

“In Q4FY24 (Jan – Mar) our earnings in the quality assurance segment from non-Indian Railway projects were up at 55 per cent, against earnings from Indian Railway projects at 45 per cent,” Mithal added.

RITES operating revenue (consolidated), excluding other income, stands at ₹2453 crore in FY24.

During FY24, consolidated consultancy revenue stood at ₹1,289 crore which is the highest ever. Turnkey and leasing segments reported revenues of ₹903 crore and ₹138 crore, respectively, with the range-bound margins. And the export revenue stands at ₹103 crore.

RITES order book stood at ₹5,700 crore in FY24-end and this included ₹2,200 crore of new orders. The company continues to secure one-order-a-day.

“Growth in order book will be on the higher side this year,” he said.

Margins Concerns

Competitive bidding for projects will however have an impact on margins of the company. The former has lower margins as compared to LOC contracts.

RITES has a EBITDA margin guidance of 25 – 26 per cent for FY25, while PAT margins are in the 19 – 20 per cent range – same as FY24.

“So having high margins in case of competitive bidding projects is tough. But our efforts would be to maintain them at least at FY24 levels,” Mithal said.